Sanctions put Texas law firms with Russian clients and offices in tough positions

Fatima Fokina

As sanctions against Russian companies and those that do business with Russian entities expand daily, the role of lawyers is increasingly in the spotlight, including pressure to drop their Russian clients. And the plight of U.S. lawyers practicing in Moscow is even more problematic.

Fourteen large corporate law firms operating in Texas also have more than 200 lawyers in their Moscow offices. Corporations, such as BP and Shell, have in-house lawyers who live and practice in Russia. In addition, several large Russian companies, such as Lukoil, hire scores of Texas lawyers to handle legal matters related to contract agreements, financial transactions and international arbitration.

Three of those 14 law firms – Akin Gump of Dallas, Houston-based Baker Botts and Norton Rose Fulbright – formerly Houston-based Fulbright & Jaworski – have deep Texas roots and combined have more than 50 attorneys in their Moscow offices.

Baker Botts, which has represented energy companies from its Moscow operation, issued a statement Tuesday condemning the Ukraine invasion.

“We are actively examining the complicated impacts of this conflict on our clients and the future of our work in Russia,” Baker Botts leaders said in a written statement. “These include the serious ethical, moral and legal considerations for the firm’s next steps and working directly with clients on any necessary transitions.

“Protecting and supporting the people of our Moscow office remains a top priority for our firm at this difficult time,” the firm said.

Three national law firms with large operations in Texas – Baker McKenzie, Sidley Austin and White & Case – said his week that they are dropping Russian clients that are specifically named on the banned list.

Some law firms, such as Baker Botts, say they are reevaluating their operations in Russia. A few firms have encouraged their attorneys to leave Moscow as quickly and quietly as possible, as they fear retribution from the Kremlin, according to lawyers at those law firms.

“Lawyers right now find themselves in a very tricky situation involving Russia,” said Texas A&M Law Professor Milan Markovic. “There’s a lot of public pressure on law firms to stop doing business with Russian companies. The speed of what is happening regarding sanctions is problematic.”

As an example of the constantly evolving sanctions environment, Akin Gump’s international trade practice group has sent more than 30 updates to its clients during the past five days.

Although the current sanctions have a technical “carve out” for lawyers providing legal advice to Russian clients to help them remain in legal compliance, U.S. lawyers face other concerns in Russia.

“A big problem in Russia is getting paid,” said Ryan McConnell, an adjunct professor of law at the University of Houston Law Center and a partner at the R. McConnell Group. “If you are unable to pay employees, you are not able to operate. And there is the very real issue of physical safety. Law firms are concerned about their people’s safety.”

Citing security concerns for their legal teams, lawyers at several law firms declined to comment on the record. Lawyers at Akin Gump and Norton Rose Fulbright declined to be interviewed.

Norton Rose Fulbright found itself in an internal dispute that went public Tuesday. First, Bloomberg published an internal memo reportedly from the global firm’s leadership instructed its staff to “refrain from providing any commentary” regarding Russia’s invasion of Ukraine. A few hours later, chair of Norton Rose Fulbright’s Canada operations wrote on LinkedIn that he and his colleagues “stand with the people of Ukraine” and that no other position is remotely acceptable and is completely disavowed.”

Norton Rose Fulbright later told Bloomberg that the original memo was not meant to prohibit its lawyers from speaking out in favor of Ukraine.

Most of the lawyers in Moscow for Akin Gump, Baker Botts and Norton Rose Fulbright specialize in corporate finance, mergers and acquisitions, energy law and international trade representation.

Markovic said there is a long-running debate over whether lawyers should represent unpopular clients. In many cases, however, these clients have long relationships with the law firms, sometimes for decades, he said.

You cannot suddenly wash your hands of clients because public sentiment has turned against them,” Markovic said. “Even when ending a representation, lawyers are ethically required to do as little harm as possible.”

Matthew Boyden, an adjunct professor at the University of Houston Law Center, said the sanctions’ “carve out” for lawyers is necessary.

“The lawyers are needed to provide legal advice,” Boyden said, including to prohibited entities, on how to remain in compliance with the law.”

For a longer version of this article, please visit TexasLawbook.net.

https://www.houstonchronicle.com/business/article/Sanctions-put-Texas-law-firms-with-Russian-16970884.php

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